DEPUTY Opposition Leader Julie Bishop has dramatically upped the ante over the AWU affair by claiming Prime Minister Julia Gillard was involved in a breach of the law.

The opposition’s accusation followed Ms Gillard’s seizing of the initiative before question time with her second feisty marathon news conference on the affair in three months.

Looking angry – and at times toughly confronting reporters, telling one not to ‘‘hector’’ her – Ms Gillard challenged critics to produce evidence. ‘‘I did nothing wrong,’’ she said.The PM launched an extraordinary, blistering attack on Ralph Blewitt, a former AWU official, who with Ms Gillard’s then boyfriend Bruce Wilson set up the union slush fund from which they siphoned money.

Replying to Mr Blewitt’s claim she had not been present when she ‘‘witnessed’’ a power of attorney form, she denounced him as someone who had admitted to fraud, who used prostitutes in Asia, and had published lewd comments with accompanying photographs of young women on Facebook.

‘‘Mr Blewitt, according to people who know him, has been described as a complete imbecile, an idiot, a stooge, a sexist pig, a liar and his sister has said he’s a crook and rotten to the core. His word against mine – make your mind up.’’

Although she did not recall this specific witnessing, she said she witnessed many thousands of documents and ‘‘I did that witnessing properly’’.

After the opposition devoted all its questions in the House of Representatives to the affair, Ms Bishop said Ms Gillard had breached ‘‘relevant laws’’, including the Associations Incorporation Act ‘‘by advising on the creation of false documents incorporating the association’’. The documentation was false because it did not set out the association’s true purpose – a slush fund for re-electing union officials.

In her news conference, Ms Gillard lashed out at the opposition ‘‘for sleaze and smear’’. Answering specific allegations, Ms Gillard said she:

• Did not remember receiving $5000 in her bank account allegedly put there at the request of Mr Wilson. She had checked with her bank, but records did not go back that far.

• Had not reported the slush fund fraud to the authorities in 1995 when she first heard rumours of it because she had no evidence. ‘‘I didn’t have anything before me which would suggest that the association’s accounts had been misused’’.

• Had not needed to inform others in the AWU about the fund. ‘‘The two people I was dealing with [Wilson and Blewitt] were office-bearers of the AWU.’’

• Only advised on the setting-up of the fund – she did not establish it. ‘‘My role was as a legal adviser providing advice about the incorporation of that association ... I have been defamed on a number of occasions with forms of words saying that I set up a fund or a bank account,’’ she said. ‘‘I did not set up a fund. I did not set up a bank account.’’ She rejected the proposition a union resolution was needed for such a fund.

After Ms Bishop put all the opposition questions, with Tony Abbott staying silent, Ms Gillard said: ‘‘For the benefit of those following proceedings by radio I confirm that the Leader of the Opposition was present at question time today.’’

On the ABC Monday night, Mr Blewitt hit back against the PM. ‘‘Julia Gillard has been labelling this a smear campaign. I think that’s a bit hypocritical of her to now come out and try and smear me.’’ She was trying to distract from the ‘‘main event’’. He claimed he had ‘‘no financial gain whatsoever’’ from the slush fund.